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Email this10:48 am
March 29, 2014
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I'm 60.
I have a neighbour who fancies himself as quite the financial guru (he's still working at 66 if you know what I mean) and at Christmas dinner he was dispensing investment advice.
Anyway, he said he had taken something called the "Canadian securities " course or something similar and said he was a qualified trader and investment advisor.
He claims that it makes the best sense to NOT take your CPP at 60 because you will lose money.
His theory is this:
The amount of your CPP pension will increase 33 perecent between ges 60 and 65 and there is no other investment that will earn you 33 percent over five years.
True?
Or false?
11:24 am
January 3, 2009
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I will be taking the money ASAP. Why? There is no guarantee how long you will live OR how long you will be healthy enough to use the money to enjoy your life. I am very responsible financially and often mistaken for being cheap when it's just that I am frugal, but there reaches a point where you need to start spending and if you're lucky enough to be 60 years old, healthy etc, take the money and enjoy it while you can is the advice I would give. I don't know the exact amount it will increase by, but it will increase if you don't touch it for up 70 years old or so, but everyday is a gift and everyday as you get up to those ages where you are healthy etc is an even bigger gift. I live fairly healthy and plan on living a long life, but you never know and it doesn't do you any good to die with a fist full of money. Even if you do gain 33 percent by 65, you have to figure out how many years it will take you to get that money back you haven't collected for 5 years. If you don't figure in return on investment, it will take approximately 20 years+ to start gaining by holding out. So you'll be 80 before you start gaining according to this math of your neighbour.
1:07 pm
February 17, 2013
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My in-laws unexpectedly passed away a year apart. One was 62 and the other 63. Not sure if they were on CPP at the time, both were retired and playing the real estate market. I know I would sure be PO'd if I had contributed to CPP all my life and never got to collect ANYTHING. My vote is take it ASAP and run. Here's a graph of how long it takes to break even by starting early:
http://www.investopedia.com/as.....052705.asp
Guess the question is how long do you plan to live?
7:41 pm
October 21, 2013
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I don't think you are really "earning" 33% because you don't have the money in your pocket during those critical 5 years. What's more, having let them elapse, you will not necessarily ever get it back. Rick's link is more realistic.
Furthermore, the desirability of taking early CPP has to be considered along with all other aspects of your financial situation, tax implications, etc. If you delay it, you are increasing your annual income forever more, which could ultimately push up your tax bracket or disqualify you for some benefit, depending on your overall situation.
I think this fellow is full of oldfashioned hogwash. A little knowledge is a dangerous thing.
9:54 pm
February 22, 2013
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Felixthecat said
[snip]
Anyway, he said he had taken something called the "Canadian securities " course or something similar and said he was a qualified trader and investment advisor.
[snip]
Remember that 50% of the folks who took the course graduated in the bottom half of their class. Same thing with doctors, lawyers and all the other professionals.
Felixthecat said
[snip]
He claims that it makes the best sense to NOT take your CPP at 60 because you will lose money.
[snip]
True?
Or false?
If you take CPP at 60 by the time you are 65 you will have 60 months worth of 30% reduced CPP pass through your bank (using the "old" rules, not sure how they apply today). If your twin brother waits till he is 65, then at 65 when you have the 60 months x 70% of CPP, he will have $0.00. Somewhere around age 76 your twin's total CPP income will equal yours and after that age his total will continue to outstrip yours.
So, as others have asked, will you live to 76? Do you need the money now?
Obviously, my example does not take income tax, present value nor inflation into account. And your neighbour's 33% is more like 43% (70% of, say $700 is $490, $700-$490=$210 and $210 is just a shade under 43% - I think 
).
GS
11:49 am
October 21, 2013
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Further to GS's comment, I remember reading somewhere that while the Canadian Securities Course has a lot of valuable material in it, the standard for passing it is relatively low.
I've never taken it, but the title suggests that it's about Securities, not about Pensions.
8:22 am
May 28, 2013
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Felix,
I'm just 65 as is my wife and self employed and my wife is an employee (I have no idea what she does for the company - nothing). Anyway we took CPP at 60 since being a company I/we paid CPP premiums personally and from the company so it was like a $20,000 / year raise when I stopped paying premiums and took the pension. Like someone side if you are not self employed your twin brother begins reaping a benefit at 76 but for people like us it is more like 87 years old!!!
Bottom line is this: If you really need that money then try and hold off a while but if it's not really a big deal then take it and invest or enjoy it. For me I look at is a paying for my yearly private golf membership plus a few grand to spare.
Value time over money as time cannot be replenished.
5:43 pm
February 17, 2013
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What I am wondering is if you take it at 60 but continue to work and contribute to CPP....does your rate get adjusted over and above the annual adjustment for additional contributions? I want to take it at 60 but have another 13 1/2 months of work before actually quitting work. With the rule changes, you no longer have to go 30 days with no income to apply, but since I am still contributing, will my rate go up after a year of collecting as if I had not started to collect until 61
? With regards to felixthecat's original question...the money I collect for that 13 months will be invested, thus garnering interest and delaying my break even point compared to waiting until 65.
7:50 am
May 28, 2013
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If you trigger CPP but continue to work and collect a wage then yes you will pay the monthly premiums but you CPP monthly benefit will also go up. By how much I am not sure but I suspect if you continued to work to 61 years and 3 months then the monthly benefit should equal or reflect as though you retired and started collecting at 61 years 3 months.
In 2012 law changed and if you had triggered CPP earlier and were not 65 and still collecting a wage then you and employer pay monthly premiums. I avoided this by NOT taking a wage and instead began RIF withdrawals. I could have taken dividends and not had to pay monthly premiums (me & company) but monies in the company are invested and doing better than RSP so I started to drain the latter.
Take the CPP, invest the benefits if you wish and enjoy ... you've earned it.
Good luck.
10:50 am
August 27, 2013
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voodoo22, i agree without your idea. take it at 60. the heck with waiting at 65 or 69.
7:49 am
February 17, 2013
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To answer my own question:
Yes...my benefit would increase, but not as if I had not started collecting for that 13 months of extra work.
http://www.servicecanada.gc.ca.....ndex.shtml
Start collecting CPP at 60 while continuing to work would add about 217 per year to my PRB.
https://srv111.services.gc.ca/PRB_01.aspx
Delaying my first check for that 13 months while I continue to work would reduce my maximum entitlement by 28.2% (.6 x 47 months) instead of the 36% (.6 x 60 months) reduction imposed by taking it at 60.
Today's maximum monthly CPP amount is 1038.33. If taken at 60, monthly amount would be 664.53.
By working another year, it would increase to 682.61 (664.53 + (217 / 12)).
By waiting an extra 13 months before collecting, the monthly amount would be 745.52 (1038.33 -28.2%) a difference of about 64 dollars a month.
Of course all these calculations are at today's rates, which will undoubtedly increase in the next 5 years.
It's early in the morning and I haven't finished my coffee yet, so feel free to double check my facts and figures.
12:49 am
December 2, 2012
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msl25 said
voodoo22, i agree without your idea. take it at 60. the heck with waiting at 65 or 69.
The death of Jim Flaherty is a reminder that nothing lasts forever.
Another man who will never enjoy retirement.
I will take mine ASAP, and don't worry about the numbers.
11:32 am
May 9, 2013
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If one is looking purely at numbers, then taking it when one is 70 is best. But how long does one expect to live? That would be the biggest factor. There's also the added issue of tax bracket, which would differ from person to person.
8:40 pm
October 21, 2013
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There is a discussion here with Doug Runchey, whom I have found helpful in the past. He is retired from working for the government in the pensions area and has a small business helping people figure out what their pension should be.
.https://www.myownadvisor.ca/when-to-take-your-canada-pension-plan-benefit/
The interview refers to a person named "Sally", and looks at her options for applying for CPP. This chart shows in more detail the break-even points as to how long you would need to live to get optimum benefit from applying at a given age. I found it useful as different commentators cite different ages as break-even points. This helps explain the variations.
https://www.myownadvisor.ca/wp-content/uploads/2017/11/CPP-retirement-pension-breakeven-calcs_Sally-Example-My-Own-Advisor-November-2017.pdf
2:07 pm
November 18, 2014
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Here's an online calculator which should help in your decision.
https://www.taxtips.ca/calculators/cpp/cpp-retirement-pension-calculator.htm
If you take it at 60 verses 65 the cross over point is approximately 72
2:41 pm
October 21, 2013
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Thanks! very useful as it allows you to calculate in actual dollars depending on your CPP income.
3:41 pm
November 21, 2015
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One can look at the CPP as starting in ANY one MONTH, anytime from one’s 60th birthday to one’s 70th birthday. If one’s 60th birthday is taken as a starting point, then any single one month of CPP postponement rewards one with a 0.6% bonus monthly up to one’s 65th birthday after which the bonus changes to 0.7% monthly. (Max bonus equals: 0.6 x 12months x 5years plus 0.7 x 12months x 5years = 78% bonus over if taken at 60). That is a good rate of return on investment.
For me the break-even point when waiting until 70 is 82. And the doctor does not roll his eyes when he sees me.
One’s projected future income is then the determining factor when to start collecting the CPP.
This link might be useful:
https://edrempel.com/delay-cpp-oas-age-70-complete-answer-real-life-examples/
Please write your comments in the forum.